India's external debt rises to US$ 558.5 billion end March 2020

Valuation gains of US$ 16.6 billion in FY2020 restricts rise in external debt

At end-March 2020, India's external debt was placed at US$ 558.5 billion, recording an increase of US$ 15.4 billion over its level at end-March 2019.

Valuation gains due to the appreciation of the US dollar vis-vis Indian rupee and other major currencies were placed at US$ 16.6 billion. Excluding the valuation effect, the increase in external debt would have been US$ 32.0 billion instead of US$ 15.4 billion at end-March 2020 over end-March 2019.

Commercial borrowings remained the largest component of external debt, with a share of 39.4%, followed by non-resident deposits (23.4%) and short-term trade credit (18.2%).

At end-March 2020, long-term debt (with original maturity of above one year) was placed at US$ 451.7 billion, recording an increase of US$ 17.0 billion over its level at end-March 2019.

The share of short-term debt (with original maturity of up to one year) in total external debt declined to 19.1% at end-March 2020 from 20.0% at end-March 2019; the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 22.4% at end-March 2020 (26.3% at end-March 2019).

Short-term debt on residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 42.4% of total external debt at end-March 2020 (43.4% at end-March 2019) and stood at 49.5% of foreign exchange reserves (57.0% at end-March 2019).

US dollar denominated debt continued to be the largest component of India's external debt, with a share of 53.7% at end-March 2020, followed by the Indian rupee (31.9%), yen (5.6%), SDR (4.5%) and the euro (3.5%).

The borrower-wise classification shows that the outstanding debt of general government decreased, while that of non-government sector increased at end-March 2020.

The share of outstanding debt of nonfinancial corporations in total external debt was the highest at 42.0%, followed by deposit-taking corporations (except the central bank) (28.3%), general government (18.1%) and other financial corporations (7.5%).

The instrument-wise classification shows that the loans were the largest component of external debt, with a share of 34.8%, followed by currency and deposits (24.0%), trade credit and advances (18.7%) and debt securities (17.4%).

Debt service (principal repayments plus interest payments) increased marginally to 6.5% of current receipts at end-March 2020 as compared with 6.4% at end-March 2019, reflecting higher interest payments on commercial borrowings and lower current receipts.

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